Reserve Bank of Australia interest rate decision due

The Reserve Bank of Australia is set to announce its interest rate decision today for the month of July. Australia

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Photo: REUTERS/Jason Reed

The Reserve Bank of Australia is set to announce its interest rate decision today for the month of July.

Australia may see up to a 9% GDP reduction this year—its first recession since the early 1990s—with the mining, tourism and construction sectors hit particularly hard. However, as the COVID-19 pandemic caseload recedes and most state economies re-open, business confidence has significantly recovered over the last three months. Accordingly, the central bank is expected not to change the cash rate (the interest rate on overnight, unsecured loans between banks), leaving it at a low 0.25%. Any increase in the rate will be contingent on progress towards full employment, which may take several years.

In order to shore up employment, Prime Minister Scott Morrison has pledged to immediately disburse $1.5 billion for “shovel-ready” infrastructure projects, including rail and electric links as well as road repairs, with a further $180 billion set aside for the next decade. In addition to increased infrastructure spending, expect Morrison to press for increased deregulation, which entails the weakening of environmental and other protections in building projects as well as rolling back regulations in finance and medicine. However, Morrison has ruled out union reform, preferring a corporatist approach to the national recovery.

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